Soaring inflation drives more Americans to live paycheck to paycheck despite 5.1% increase in wages
Increased wages can't catch up to soaring prices of consumer goods, prompting Americans to live paycheck to paycheck
Inflation 'crushing' both the middle class and the poor: Energy expert
The Schork Group principal Stephen Schork argues the U.S. needs a 'balanced approach' towards a green energy shift, warning it should include the 'responsible use of fossil fuels' or else inflation and slow economic growth will continue.
Recent surveys show surging inflation is driving more Americans to live paycheck to paycheck.
The annual inflation rate for the United States is 9.1% for the past 12-month period that ended in June, according to data published on July 13 by the U.S. Department of Labor. That represented the largest annual increase since November 1981. The consumer price index previously surged in May by 8.6%.
In an effort to curb soaring inflation, the Federal Reserve announced on Wednesday its second consecutive 0.75 percentage point interest rate hike, increasing the federal funds rate to a target range of 2.25 to 2.50%.
Federal Reserve officials have already since signaled more possible increases. Their remarks come after the personal consumption expenditures index – a figure more closely tracked by the central bank compared to the consumer price index – jumped by 6.8% in June from a year ago, according to data released Friday by the Commerce Department.
According to another measure released last week, the economics cost index showed a 5.1% increase in wages for Americans over the past year, but Federal Reserve officials have noted that inflation driving up the costs of goods means that those larger earnings for American workers won’t take them far at the grocery store or gas pump.
Inflation is driving up the price of groceries for American consumers. (iStock / iStock)
A report released by the Lending Club in June found that 61% of Americans — roughly 157 million adults — lived paycheck to paycheck. That saw an increase from the more than 58% of Americans who reported living paycheck to paycheck in May. In June 2021, that figure was at 55%.
Of those earning $200,000 per year or more, 36% reported living paycheck to paycheck in June. A different recent survey conducted by Willis Towers Watson found that of those earning $100,000 or more per year, 36% also reported living paycheck to paycheck, stretching their large salaries thin.
LendingClub also found that among all consumers, average savings dropped to $10,757 in June from $11,274 in May, meaning more people struggling to afford their lifestyles are falling back on their credit cards and racking up higher monthly balances, making them more financially vulnerable.
A person pumps gasoline into their car. (iStock / iStock)
According to the U.S. Bureau of Labor Statistics, prices for food increased 10.4% during the past 12-month period ending in June, representing the largest uptick since February 1981.
As for energy, prices rose 41.6 percent over the last year, the largest yearly increase since April 1980.
Prices for new vehicles increased 11.4 percent over the year, and prices for used cars and trucks were up 7.1 percent, while prices for motor vehicle parts and equipment increased 14.9 percent.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Until recently, gas prices had also been soaring but now have shifted to a gradual decline.
As of Monday, the national average for a gallon of gas fell to $4.21, down 14 cents since last week, according to the American Automobile Association.